Apple's newly introduced iPad Mini and 4th generation iPad are seen during Apple's special event at the California Theatre in San Jose on October 23, 2012 in CaliforniaApple unveiled a smaller version of its hot-selling iPad on Tuesday, jumping into the market for smaller tablet computers dominated by Amazon, Google, and Samsung. The iPad mini's touchscreen measures 7.9 inches (20cm) diagonally compared to 9.7 inches(24.6cm) on the original iPad. AFP PHOTO/ Kimihiro HoshinoKIMIHIRO HOSHINO/AFP/Getty Images

At an event Tuesday at San Jose's California Theatre, Apple CEO Tim Cook and vice president of marketing Phil Schiller unveiled the iPad Mini and surprised the tech community with a new iteration of the full-sized iPad only seven months after the previous iPad was introduced.

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While the pair also showed off a host of other new tech products, the company's tablet offerings were the most scrutinized, as a smaller version of the iPad has long been rumored as a way to battle Google's Nexus 7 and Amazon's Kindle Fire tablets, 7-inch devices that mostly start at $199. Analysts had predicted that Apple would price their offering -- slightly larger at almost 8 inches diagonal -- around $249 or as high as $299.

"When asked what the most they would pay for a smaller iPad was, our respondents on average said that they would pay $242 for a 7-inch iPad and $268 for an 8-inch iPad," Baird Equity Research analyst William Power told Reuters.

However, Apple priced the iPad Mini starting at $329 for the cheapest version, which offers only Wi-Fi connectivity and 16 gigabytes of storage. The 32GB version will be $429 and the 64GB iPad Mini will cost $529, with models that also connect to cellular networks starting at $460.

"At $329, it won't draw people from Kindles and Nooks," University of Michigan professor Erik Gordon told Bloomberg News.

"The pricing may limit sales. From a profitability perspective though, I think at $330 Apple is still getting adequate gross margins on the sales," Morningstar analyst Brian Colello said. "But at that price point it may limit adoption and unit volumes."

"Apple had an opportunity to step on the throat of Amazon and and Google yet decided to rely on its brand and focus on margin," Edward Jones analyst Bill Kreher told The Associated Press.

The pricing seemed odd considering the iPod Touch -- which is the same size as the iPhone -- is only $30 cheaper than the cheapest iPad Mini, and the iPad 2 starts at $399.

"It's coming in the range that most were grumbling about and that, quite frankly, we're a little bit concerned about," JMP Securities analyst Alex Gauna told Reuters. "It's a little confusing at this juncture to try and figure out how it fits into the line-up. Is it going to cannibalize the more expensive iPad?"

Merrill Lynch analyst Scott Craig believes that will be the case, as he said "it's reasonable to assume that the iPad2 will likely be phased out at some point " with the introduction of the iPad Mini.

Some analysts disagreed with the consensus, however, saying that Apple charges premium prices because it has premium products, and consumers will respond.

"Apple has always been a premium hardware manufacturer. It's basically a hardware company and they don't have Google advertising or Amazon's online store to fall back on," Destination Wealth Management CEO Michael Yoshikami told Reuters. "But people are happy to pay a premium because it's quality hardware, and the ecosystem (of content and apps) cannot be underestimated."

Other analysts were happy with everything the Cupertino tech gaint presented Tuesday, with Apple bulls Brian White of Topeka and Gene Munster of Piper Jaffray unsurprisingly praising the new product. And most analysts, even those who were disappointed with the price, believe it will be a hit with consumers nonetheless.

"We believe that the iPad will do particularly well as a holiday present and as an educational device," Jefferies analyst Peter Misek said.

Investors did not seem pleased with Apple's announcements, as Apple's stock gave up most of Monday's gains. Before the event began, Apple stock fell about 1 percent as the markets fell overall, but shares took a beating after the event ended and closed at $613.36, a daily decline of 3.3 percent.

Facebook succeeds, Netflix flops in busy day for valley tech earnings

Tuesday was Silicon Valley's busiest day yet in the earnings season, as four prominent companies in the Bay Area reported financial results for the fiscal third quarter.

At the forefront was Facebook, offering its second report as a public company after seeing its stock decline almost 50 percent since its record-breaking initial public offering in May. The Menlo Park social network managed to exceed Wall Street's lowered expectations, reporting a profit of 12 cents a share excluding one-time charges, on revenue of $1.26 billion. Analysts expected earnings of 11 cents a share on that basis, on revenue of $1.23 billion, according to Thomson Reuters.

Facebook stock shot higher in after-hours trading following the release of the results, as analysts praised the company's performance in the mobile sphere, a glaring weakness for the company durintg and since its IPO.

"Advertising revenue from mobile was the number that really stood out," Sterne, Agee & Leach analyst Arvind Bhatia told Reuters. "They are saying mobile ad revenue was 14 percent of total ad revenue. That would be about $140 million and I was expecting $40 or $50 million from this."

Shares, which gained 0.9 percent to $19.50 in regular trading, increased more than 10 percent to about $21.50 within two hours of the close.

Netflix stock moved the opposite direction after the Los Gatos video-on-demand company reported its third-quarter earnings, as it once again reported disappointing subscriber growth. Netflix had promised investors up to 7 million new streaming video customers in the 2012 calendar year, but after adding 1.2 million subscribers in Q3, it had to drop that target dramatically, to a range of 4.7 million to 5.4 million.

Netflix attributed the numbers to "involuntary" cancellations, which result from customers' debit and credit cards found to suddenly not be valid. The company also posted much stronger profit numbers than expected, 13 cents a share to 5 cents a share, and revenue in line with projections.

That didn't matter to investors, however, as the stock plummeted more than 16 percent in late trading after gaining 0.5 percent in regular trading.

Meanwhile, Gilead continued to cruise along, avoiding the sharp ups and downs of Netflix and Facebook. The Foster City company reported profits of $1 a share on earnings of $2.43 billion on the strength of its Atripla and Truvada HIV drugs; both results easily beat expectations. Gilead stock rose about 3 percent after the bell following a loss of 2.2 percent in regular trading.

Palo Alto software company VMware also beat analyst expectations, posting earnings of 70 cents a share on $1.13 billion in revenue, while Wall Street expected 63 cents a share on $1.13 billion. The company also hired an experienced hand to take over their chief financial officer role, nabbing former Skype CFO and Microsoft executive Jonathan Chadwick. The stock gained 0.4 percent in regular trading and 2.5 percent after-hours.

Layoffs at Zynga and elsewhere, poor earnings hurt Wall Street

Silicon Valley's successes after the bell may help salve the wounds of investors who stomached a bad day on Tuesday.

Blue-chip companies reported earnings early in the day and severely disappointed investors, with DuPont announcing layoffs, 3M cutting its profit projections for 2012, and UPS continuing to warn of a poor global economy. Bad news continued after the bell, with Dow Chemical accidentally announcing that it will lay off thousands of workers.

Layoff news wasn't all far away from Silicon Valley, however, as San Francisco online gaming company Zyngalaid off 5 percent of its staff, with cuts focused outside of its headquarters. Reports appeared during the day, and the stock declined to an all-time low of $2.17 before closing down 5.2 percent at $2.20, before the reports were verified by the company after the bell.

Still, tech was one of the strongest performers on a weak day for Wall Street, as the tech-heavy Nasdaq lost 0.9 percent compared with a 1.8 percent descent on the Dow Jones and a 1.4 percent loss for the Standard & Poor's 500. The tech sector was helped by a 5.7 percent gain for Yahoo (YHOO), showing investors' belief in the vision CEO Marissa Mayer revealed in her first earnings conference call Monday.

And the widely watched Standard & Poor's 500 index: Down 20.71, or 1.44 percent, to 1,413.11.

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, the Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.